Glossary · Valuation

P/S ratio

Market cap divided by the last 12 months of sales.

Why it matters

Useful for young companies that don’t make a profit yet. A high P/S needs high margins later to make sense.

Software firms often trade at 5x to 15x sales; retailers under 1x. Compare within the industry.

Also called: price to sales

In the Cluenex app, this explanation opens next to every p/s ratio figure, with the live reading for the stock you are looking at. Open it in Cluenex